The adoption of asset management within the water sector still varies considerably at present. Approaches used range from those focused on asset condition and performance, to those focused on the underlying purpose of owning the assets (i.e. the provision of service at an acceptable level of risk). The level of sophistication also varies ranging from informal, through basic to advanced asset management techniques. Advanced asset management requires the use of sophisticated software-based modelling tools. The "Pipeline Asset and Risk Management System" (PARMS) is a suite of computer-based modelling tools, developed in collaboration with water sector partners in Australia, and designed to assist in the management of water distribution networks. A new tool has recently been added to the PARMS suite, PARMS-PRIORITY, which helps water utilities to determine those assets that should be rehabilitated to manage cost and improve levels of service. The analysis is based on estimating risk, where risk is calculated by combining failure predictions for pipes with the output of cost assessment models. Through this risk analysis, PARMS-PRIORITY assists water utilities to make pipe renewal and valve insertion decisions. Development of sophisticated asset management tools such as PARMS, in conjunction with data improvement efforts, will facilitate the adoption of advanced asset management focused on delivering sustainable solutions. Such tools will thereby help the water sector to meet the challenges associated with expected population growth, and the need to underpin economic growth and environmental quality. Includes 24 references, tables, figures.